Net sales increased 28% to $29.1 billion in the first quarter, compared with $22.7 billion in first quarter 2015. Excluding the $210 million unfavorable impact from year-over-year changes in foreign exchange rates throughout the quarter, net sales increased 29% compared to first quarter 2015.

Operating income was $1.1 billion in the first quarter, compared with $255 million in first quarter 2015.

Net income was $513 million in the first quarter, or $1.07 per diluted share, compared with net loss of $57 million, or $0.12 per diluted share, in first quarter 2015.

“Amazon devices are the top selling products on Amazon, and customers purchased more than twice as many Fire tablets than first quarter last year,” said Jeff Bezos, founder and CEO of Amazon.com. “Earlier this week, the $39 Fire TV Stick became the first product ever — from any manufacturer — to pass 100,000 customer reviews, including over 62,000 5 star reviews, also more than any other product ever sold on Amazon. Echo too is off to an incredible start, and we can’t yet manage to keep it in stock despite all efforts. We’re building premium products at non-premium prices, and we’re thrilled so many customers are responding to our approach.”

. . . .

Amazon was ranked #1 in corporate reputation among the 100 most visible companies in America, according to the 23,000-person Harris Poll. Amazonwas also ranked #1 on the Reputation Institute’s U.S. RepTrak 100 list of the most reputable companies, which is based on more than 83,000 ratings.

U.K. consumers ranked Amazon #1 in customer satisfaction in a nationwide poll from the Institute of Customer Service. And for the second year in a row, customers selected Amazon.in as India’s most trusted online shopping brand, according to an annual Trust Research Advisory survey.

The Amazon Global Store on Amazon.cn has grown to over 10 million items, providing Chinese customers with an easier and more convenient shopping experience with authentic products curated from the Amazon.com website.

. . . .

Second Quarter 2016 Guidance

Net sales are expected to be between $28.0 billion and $30.5 billion, or to grow between 21% and 32% compared with second quarter 2015.

Operating income is expected to be between $375 million and $975 million, compared with $464 million in second quarter 2015.

Felix… Could you just say briefly, what you think accounts for biggest
growth [or lack of growth, sometimes corps take out two to the woods and only one comes back in terms of costs] at amz in this last quarter?

The single biggest cash cow is AWS. The reports I’ve seen say it generated over $600B of the $1.1B in operating income.

The rest, under $500B came from the rest of the empire.
It’s a safe bet that around half of that came from the third-party merchants and it is a safe bet that content as a whole is still in the red, what with all the investment they’re doing in video.

Since they don’t disclose actual numbers for their hardware sales there is no way to know for sure how well they are really doing in the video arena but there is one quiet success that suggests they are doing very well indeed with the FireTV line: they are the only streaming platform, so far, hosting Sony’s Vue video service.

That is one honking big success because it gives them today something neither Roku nor Apple has delivered. They may or not be the top selling video streaming hardware around but the combination of Dish’s Sling TV and Sony’s Vue apps certainly gives them a leg up on Roku and Apple. That is probably their next big cash cow. At a minimum it should bring in more millenials to Prime.

They did very well this quarter and they are predicting a similar one next. And that is the slowest quarter of the year.

By all indications they are now making money faster than even Bezos can spend it. With tech companies that usually means: acquisitions.

thanks for that Felix. What ability you have to write clearly and
accessibly.

I was just reading this at INfoworld, “…The public cloud might be competing with the company using it. Amazon’s cloud-storage offerings compete with both Dropbox’s and Apple’s, for example, and AWS’s parent company, Amazon.com, competes with Apple in music and video streaming. (Amazon even stopped selling streaming media players like the Apple TV and Google Chromecast that compete with its Fire TV.)
The company has reached a point where it makes good economic sense to move off a public cloud and run its workloads on its own infrastructure. As the number and size of your workloads grow, the pricing of the public cloud may exceed the cost of doing it yourself — Dropbox seems to have come to that conclusion. I expect more companies — especially those offering online services — will reach the same conclusion in the coming years.”

as AMZ next move.

I wonder, if ever indies can use AWS in some useful clever way to build business. That it is such a huge part of AMZ income, is quite something…
esp since many people seem to think amazon sells shoes, shirts and underwear… and books. And food. And some streaming vid and a few shows they prod’cd.

I was reading Zuck’s newest plans for facebook dominion over all othr Godzillas out there, a couple days ago. I got this funny feeling that as authors, we might be looking through the littler end of a telescope, meaning looking only at our own book/audio products. Maybe we should be thinking about how to develop aws, or its equiv somehow….to dommmmminnnnnnate the worrrrrrrld. OR to boost income in some practical manner. But how. I do not know. But appreciate it’s something to think about. It seems like someone else is always building the dive tower, and we ar always running to climb it. I wonder what it would mean if we were building a diving tower and others were running toward it, including ourselves, and taking a small cut of all the climbers’ income.

Does one need another planet to build all those servers and etc to be pm the other end of the business. Remember Felix and others here, when Univac practically took up a whole city block… lol

Just wondering out loud why I am always the supplier and not the builder too, even via a coalition.

Depends on what you want to do.
A lot of the benefit from AWS is not having to maintain the hardware.
For small businesses that can’t afford to hire full time employees for an IT department hosting lets them “outsource” their IT support.

Think of a blog website: tools exist, both free and commercial, to run a blog off any PC. (Including the $99 stick PCs and Windows tablets.) It isn’t terribly hard to set up the website and run it from a PC in your home office. (Your ISP might squawk if you get slashdotted but it is generally doable.)
Or, you could sign up for WordPress (for one) and let them host your blog, provide the hardware and bandwidth, and maintain the OS. Done right, blog visitors will never see the difference.

Amazon’s AWS does the same thing but they don’t just host web pages: they host corporate databases, accounting systems, inventory control, Human Resources, email, document msnagement, in-house line-of-business apps. Most anything that corporate users do on computerd. And they usually let you move over existing configurations that might have been running on Linux, Windows, Oracle, SQLServer, or other proprietary environments. The beauty of hosting services is they provide virtual computers that scale dynamically to the company’s needs. AWS (and its competitors) turn computing into a utility like water and power instead of a capital expense ora cost center.

And the Univac comparison is very appropriate because cloud computing is in many ways a return to the days of mainframes and time-sharing systems of the 60’s and 70’s. Except that instead of running on giant computers they run in datacenters built of thousands of PC-class computers and drives all networked together.

Business computing come full circle.

We may yet get to see Multivac, Asimov’s universal computer. And it might come from Amazon. Though Microsoft is more likely. Skynet is more likely coming from Google. (Daleks we now know are coming from China since they’re already here.)https://en.m.wikipedia.org/wiki/Multivac

To add to Felix’s comments, Amazon is an applied technology engine. I used to know a few Amazon engineers back in the late 90s. They were working on AWS twenty years ago. First it was to move their online store off mainframes that Amazon had to pay for even if they weren’t using them. It’s a big problem for corporate computing: if you don’t want your web site to crash during the super bowl, you have to have capacity that you don’t need the other 364 days of the year. Amazon faces the same problem with black Friday and a few other days. Leasing equipment helps, but not that much.

I don’t know the details of Amazon’s progression, but soon after they had the technology working for variable capacity for their online store, they (Bezos?) realized they could sell their excess capacity as a service to others in the same boat.

They invented cloud computing. All the pieces were there, and some companies were even using the pieces, but Amazon invented the cloud business. Their cloud is so efficient, their rival Netflix runs on AWS, not a private datacenter. The rest of the cloud providers, Microsoft, Google, IBM, etc. are playing catch-up. (I think one or two will eventually whack AWS because they are more focused, but who knows?)

Moving down the line to Amazon ebooks, Amazon figured out how to use their infrastructure to make epublishing roll. KDP and Kindle are a brilliant use of Amazon platform for storing and distributing books. I hate to say it, but the reason there are no gatekeepers for KDP and CreateSpace is only that they would be a cost. Trad publishers have to gatekeep because publishing books costs them money. Amazon publishes everything because they have sucked all the cost out of publishing. Publishing a unsaleable ebook is only a grain of sand in massive Amazon computing empire. The only cost of a bad ebook for Amazon is in reputation when a customer pays for and downloads a stinker, and I don’t think that is much. That explains Amazon’s less than zealous efforts to eliminate scammers. I suspect their concern over review scamming has more to do with non-book merchandise that has to be physically and expensively returned.

If you look at Amazon’s operations, they always use their platform to suck out costs, then deliver at reduced cost to the customer. Back that with their customer-first policies and you have a winning business, but perhaps not as winning as their basic product: cloud.

What does that tell us? That Amazon builds technological infrastructures to deliver services orders of magnitude more efficiently than anyone else and then uses that efficiency to dominate markets. Pretty cool.

Amazon’s cloud domination is on the hosting side, the basic infrastructure. Most of their competitors go higher in the services stack, offering added value environments and apps. So the competition isn’t a straight cage match: there is plenty of room for coop-etition.

My pick for eventual top dog in cloud computing is MS because they’ve already moved their top-dog server functions to the cloud and they can monetize those even on their competitors’ cloud services. For example, a lot of AWS customers run Office, Exchange, Sql Server, and Sharepoint so, while they are Amazon clients, a good portion of their cloud operation costs is revenue for MS.

Replying to Felix. Agree that Amazon has excelled in Infrastructure As a Service (IaaS) hosting. Competitors like Microsoft and IBM provide more at a higher level in the implementation stack. But from an engineering standpoint, if you intend to be innovative, AWS style infrastructure as a service offers the most opportunity for innovative development. Higher levels in the stack save time, but the savings constrain the developer to established development paradigms and inhibit radical innovation.

If you assume that there are no more efficiencies or innovations available at the bottom of the stack, higher level offerings win, but I am not so sure of that assumption. Current hypervisor and container technology is fine, but there still may be innovations at the lowest level that will blow the current stack out of the water. Visualization, as much as I love it, is grossly inefficient. An architecture that eliminates virtualization and provides compute on demand could blow away everything we see now. Low level cloud interfaces, such as AWS EC2, are may provide first exposure to low level innovations, but it could just as well be a small startup or university researcher.

How would this affect Microsoft, IBM or Oracle? Hard to say, but judging from the quality of their engineering teams, they have already been thinking hard about the future of the cloud and have been developing methods to take advantage of the newest thinking.

Agree with your read on possibilities.
I even hope it comes to pass.
But corporate IT is notoriously conservative (not without good rea$on$) and the bar for getting them to change is extremely high. It would take something truly revolutionary to get them to ditch their billions and billions of dollars invested in a generally functional system.
Like, here we are, 50 years after the microcomputer revolution and IBM’s mainframe business is still rolling merrily along.
Or consider the foot-dragging every time Microsoft rolls out even incremental updates to Windows.

If “almost as good and totally free!” barely makes a dent in that market it is going to take something from an entirely different universe to sway the glass house boys. 🙂

In corporate IT it never pays to bet against the tyranny of the Installed base.

AWS sticking to infrastructure and hosting is their way of shrugging and moving on. Sure, Amazon offers its own database and open source environment but that’s simply good sense: try to grab as many customers not committed to an existing stack as possible. No sense letting the few free agents around commit to Oracle, IBM, or Microsoft if you can help it. But that isn’t going to move the needle much. Not as much as “you can easily move your existing operation here and save money!”.

Amazon doesn’t fight the tide. Their style is more white water kayaking. 🙂

Felix– Well, everyone’s perception is different. I have worked with many large corporations on instrumenting and streamlining their IT infrastructure.

In my experience, like yours, the first value in large corporations is greed, they have to be to satisfy their ravenous investors and stay in business. That can take different forms. Sometimes it is a refusal to spend an extra dime on IT. Other times its a mad rush to outsourcing when some offshore organization dangles a big cost decrease.

But other corporations look for business transformation, new lines of business. These are not that rare. Not all corporations that are losing their underwear to the likes of Amazon are as pig-headed as trad publishing or B&N. They are moving to the cloud in hoards. That includes insurance companies, banks, large B&M retailers, and government agencies. They’ve been held back by security issues, but those seem to be getting under control, especially with SAS 70 and SSAE 16 audits gaining traction.

Having come from a company with a mainframe cash cow, I don’t see mainframe rolling merrily along. It may appear to be, but their is little or no new business and the old business is gradually eroding. I have seen a pattern: companies start using cloud to quickly ramp up a new service, the service succeeds, and they begin to migrate their mainframe implementations to IaaS cloud rather than invest in upgrading blue iron. The main reason, in my experience, has been that flexibility in responding to business is more important than cost savings, which have been oversold. I have also been astounded at the number of SMBs that are using cloud.

IKR? iTunes worked fine until they “fixed” it. A downgrade not an upgrade. Every time Apple shoves out a software update, it screws up something that worked fine. And sure, take your iPod in to the iTunes store, explain the problem (if you actually can!) and get a teenager who suggests you wipe the entire device and start over.

honestly, the only one i can i.d. is ‘buy competition’. as in Zappos for instance. It’s an old corp strategy actual of big pubs… buy the services up you want to dominate in, and either use them or extinct them. Say i audio, or by outpubbing the pubs and putting some on the run.

Just saw it happen in another class of items, with
Novartis who bought up Buckleys I believe, stopped mfg it, to push their own brand of lesser effective medicine. {public outcry might have brought a
change of direction, or maybe in canada, the govt intervened. Dont know. Just
have seen the strat of elephant eats up all ostrich eggs when elephant wants to sell turkey eggs only, many times. Or elephant wants to dominate all eggs, buys up all farms, and puts some to sleep and others honed for selling eggs by the gobjillion for cheap

Can you tell us another underlying premise Felix? I really hope to understand the much larger but also finer pic of amz, in part because I think it is worth emulating in certain ways if indies can

From one direction, they look as stores (or a lending library) focused strongly on consumer needs. Friendly return policies, easy of use, PC-independent reading hardware. And apps that let the customer read the books on PCs, phones, and tablets, at their discretion. By catering to consumer needs, even at their own expense, Amazon built a massive pool of loyal customers.

From the supplier side, KDP, etc, are tools to access that pool of customers. It isn’t impossible to get to those customers without Amazon, either through other vendors or selling direct, but for many “suppliers” it is much easier and much more effective going through Amazon.

Amazon is a middleman that provides enough value to both sides of the transaction that neither has a strong enough incentive to cut them out of the loop.

The same formula is playing out in the home automation arena: Amazon provides Alexa voice control as free service to other device manufacturers who have their own control systems, but those systems can only their own gadgets which is good if they commit to their system, say GE’S, but bad if they commit to somebody else’s, say, Philips. But Amazon and Alexa support both so supporting Alexa gives GE a chance to sell to Philips customers and Philips a chance to sell to GE customers. And because choosing one doesn’t prevent buying from the other (if the customer has access to Alexa) the customer is more likely to actually buy a home automation gadget from one or the other. Or from Samsung.

So Amazon making Alexa free grows the home automation market for everybody and “coincidentally” puts Alexa and Amazon front and center in home automation. They cater to the needs of the customer, make themselves useful to the supplier, and eventually become, if not exactly indispensable, very hard to do without.

Just as in ebooks.
Just as in cloud services.
Just as in third party merchant sales at Amazon.com.

There’s a lot of ways to analyze Amazon’s businesses because they really are a conglomerate and not a single company but for the most part they all follow the formula of catering to the customer first, the supplier second, and trying to become indispensable to both.

Kinda like the mythical perfect butler.
(Although Amazon is more Pennyworth than they are Jeeves.)

Other than publishers, few other suppliers bother to gripe about Amazon being too good at what they do. Mostly they just take the money and run to the bank.

I can see what you are saying… many revenue streams held in a huge container, and prioritization of benefitors; first and foremost customers, second suppliers. And the philosophy of attempting to make opptys to both so deep and broad it seems,

that sort of like Leavittown, [and the old trading post system near the settlements but on a far mor grand scale] you could go to work, get your clothing, groceries, car [if one even needed one], be married, give birth, schooled, buried, etc right on the premises/acreage without having to go very far afield. Sort of like a bubble of work and goods that follows you around, satisfying supposedly, every need/ and a few whims.]

Interestingly, in the old sort of semi-utopian-factory-preplanned communities, the idea was to keep families and workers and commerce and manufacture output all in one place [in the housing development that was a little like in some, ticky tacky houses on the hillside]… and people were supposed to love this so much they would never leave [the manufacturing jobs]

I think too many families in the leavittowns of the world [the town of Hershey [so named] off shore in a most unlikely place, might have been an effort of company town in another form.

That idea of company town or pre-planned fulfillment of needs is an interesting and ancient idea… fincas, plantations, farms, ranches

Prob too Felix, the people in those situs, including many of us as indie suppliers are hoping too as you put it, to take the money and bank it, without too much griping about.

Your description of thousands of computers carrying all the 1s and 0s and I suppose eventually those computers that surpass 1s and 0s — is so sci fi to this old person. And yet I can see too the immense halls filled with chinese workers in ancient times bent over and abacus-ing away in order to calculagte the emperor’s whatever order.
\
I want to read what you wrote Felix a few more times, because it is the most cogent, and also has, I think, additional parallels to past/ ancient practices, but in ways that really would seem out of this world to many people across the world right now and also at beginning perhaps of 19th century amongst the ‘educated’ except for visionary-geniuses.

I was thinking too about your example of interchangeability of process/platform, and ‘trading’ through amazon in that way, reminded too of some of the practices of not only rendezvous amongst the tribes, but also Silk Road practices by the dominant/ domineering merchant ‘kings’ of the road.

In those early days each blade was about the size of a cafeteria tray. Today’s designs have blades the size of an index card.

The bulkiest part of the modern cloud datacenters is data storage, hard drives and flash storage modules, tape backup silos, etc. But solutions are emerging: Microsoft is currently experimenting with artificial DNA as a data storage system.

Yeah, futuristic.
It is the 21st century, after all.

But, as you say, underneath it all the core human behavior and business models are barely changed. The toys change but the primate stays the same.

That is fascinating, from cafeteria tray to index card. And called blades. And a.DNA model for dss. THAT is an amazing idea given the many turns to actual DNA that appear to broadcast/transmit, communicate, shut down at intervals, receive, formulate [under certain conditions reformulate] various factors.

To this tiny brain, that’s end-game LIVING sci fi.

Even the language is so original in application. Felix, they are actually using ancient leitmotifs to describe a process not yet built. A leitmotif is a symbol or idea or a one word concept, but when you shake it, dozens, if not hundreds of connecting ideas fall out of it, often showing a kind of ‘map’ to how an actual way through, all goes together.

Keep helping us understand Felix. Rather than reading your explanations and understanding better, and saying Oh, ok, that’s that… many will find your ways of unwrapping the processes in clear English, makes the entire not only claro, per, tambien, even MORE fascinating.

The bridges to ways and means ‘past and present and future’ have some VERY interesting conveyances and cargos moving across them in our time.

They recently embarked on tests for building the cloud datacenters hundreds of feet under the sea. Little mermsin territory.

(Try a web search for: microsoft underwater data center)

Writing near-future SF is going to get ever more challenging by the week the way things are going. Just this week there is the microsoft story, the Chinese introducing armed robots that even look like Daleks, and today a UK research team announced they figured out how to get two-inch resolution pictures of the martian surface out of existing Mars orbiter imagery by Computer-processing multiple images of the same site. That is essentially the same quality as you’d get from a low altitude drone.

your insight Felix, on ‘near future SF’ becoming “ever more challenging by the week’ because of fast developments in a.dss, tech and application, reminds me too, of The Onion.

Used to be headlines were so outrageous everyone knew they were fictive. Nowadays, with the completely flanging loose electrical wires of many layers of our cultures, I think The Onion must really be challenged to find an ‘unbelievable’ headline… unless it has little newly discovered Martian dogs in it. Even then, it might be too close to a possibly immanent reality, lol.

“….Hundreds of feet under the sea” …. Interesting beyond the beyond. I wonder about sq ft pressure 100s of feet down the farther one goes, one kinds of structures would have to be built to shelter, magnetic variations underwater, through water, emanating upward from seafloor, shipping lane disturbances, migration patterns, and as you know, those sudden underwater geysers of leaking black crude veins.

I wonder too how MS can keep amazon from also buying ” millions of dna molecules’ which is amazing in itself, to develop same as MS, all data banks of bajillions of space onto a MATCH HEAD? I know Bezos seems a little less out there with drones’ as postman, and going to space ahead of whomever, and buying a newspaper in times newspapers are dying, [that latter move actually being brilliant,imo] but can you patent a process that draws on a dna model that cannot be patented? Amazon would, according to what you’ve said, not nec need to put the huge R%D into developing a.dna, but would share/use/ sell its tech to others who already use AMZ’s 50% big time services?

The process for making the synthetic DNA is critical, but very low level. It’s akin to the development of the transistor. Entire industries have been built off the infinite “minor” variations/improvements on that tech.

The problem of building reliable molecular level data storage (and, eventually, computing) probably has hundreds of workable solutions. Or none.

There’s plenty of room for all interested parties to play.

The key differentiator is that Amazon is more like Apple than Microsoft or Google: their R&D investment is geared overwhelmingly towards the development of new products instead of basic research and “inventing the future” stuff like Google and MS.

In Amazon’s defense, they can’t afford to spend that kind of money on next decade-and-beyond explorations. They are a low margin operation and spending 5% of revenues on low-probability research isn’t within their budget. As you said, delivery drones, industrial robots, and fallback display technologies (Liquavista) are more their speed. And Liquavista they probably bought with “mad money” since it doesn’t look like they’re be doing anything other than generating patents.

Apple’s lack of investment in basic R&D isn’t as defensible but, hey, they’re Apple. They don’t have to give back.

In general we should be happy that companies like Intel, IBM, Google, and Microsoft are willing to “waste” big money exploring the blue sky space. At a minimum, they’ll tell us where there be dragons.

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